Mumbai: Bond yields fell for the second straight day on Monday, after the Reserve Bank of India’s decision to buy back a higher-than-expected Rs200 billion of bonds this week.
Sentiment was also upbeat after the Reserve Bank of India (RBI) rejected all bids at Friday’s federal debt auction, indicating discomfort about high yields.
After market hours on Friday, the RBI said it would buy back Rs100 billion each of government bonds via auctions on Monday and Friday.
At 2:15pm, the yield on the 8.24% bond maturing in 2018 was at 6.41%, off a low of 6.37% and below its previous close of 6.80%.
Dealers said the selection of 8.24%, 2018 paper for the buyback was a big positive as it was widely held and would pave way for buying more of the 6.05%, 2019 paper that should become the next benchmark.